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The changing face of the township economy

In the late 1990s and early 2000s, whenever a township dweller spoke of his or her family being in business, it meant one of two things: they either owned a retail shop or were in the taxi industry. That is what business in the township was all about in those days. There was the odd different business but, in the main, township businesses were of the retail and taxi kind. This gave rise to a few business types based on the taxi industry and the retail sector: mechanical workshops, spaza shops, taverns and one or two wholesalers.

This face of the township economy is changing, even though the change is not of the voluntary kind. The arrival of highly price competitive shops owned by foreign nationals and the entry of the retail giants into the townships has forced local businesspeople to reconsider their business model. The majority of the business owners have abandoned business altogether, but those who have remained have now chosen to branch out of their comfort zones and explore other forms of business.

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One of the legacies of the 2010 soccer World Cup is that guesthouse accommodation is being viewed differently since then. People now realise that there is a local market for overnight accommodation in the townships that is of a standard or quality that would be acceptable anywhere in the mainstream economy. Most townships now boast world-class guesthouses that represent a different type of business to the usual retail type of business and require a totally different skills set. This is not restricted to overnight accommodation – long-term rental accommodation is also now being provided.

People who do not have their own property in the townships have always had to rely on what is traditionally referred to as back rooms. These are rooms built at the back of the main house and rented out to those requiring accommodation. The quality of these rooms is hardly ever of the same standard as the main house. Today, there is a proliferation of double-storey buildings in the townships intended solely for renting out. The township property market has now become an alternative form of business for the township entrepreneur.

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In fact, in certain cases, the multistorey buildings are designed in such a way that one or two businesses – which attract higher rentals – can be accommodated on the bottom floor, with families or individuals housed on the upper floor. Municipal zoning requirements will eventually put an end to such practices, but these laws need to be applied in a way that takes into account the fact that township spatial planning was not done with businesses in mind. People are making do with what they have.

It is thus not surprising that township entrepreneurs are now investigating the feasibility of having mini factories wherever space will allow. With the rest of the township economy largely still consumer based, there is room for mini factories that supply the retail stores. One of the main ingredients of the fastest-moving fast food, the kota, is sliced cheese. This bread-based delicacy contains anything from mince to cold meats, burger patties and cheese. Any entrepreneur who can successfully construct and operate a mini factory supplying cheese and other ingredients will be successful, if his or her business model is correct.

One of the biggest causes of the so-called xenophobic attacks that were aimed mainly at foreign-national-owned businesses in 2008 and 2015 was the allegation that locals have been muscled out of their traditional retail business domain (shops and spazas) by foreign nationals and big retail shops like Checkers and Pick n Pay. What was never acknowledged, though, was that the locals had become landlords. All the foreign-national-owned shops are housed in buildings owned by locals, so a spin-off of the undesirable process of the locals losing their businesses has been the creation of new types of business opportunities for locals in the property market.

What should be happening from the government side is the identification of ways in which township entrepreneurs can be assisted in making a success of the changes in their economy.